biz org class 1

"the corporation"













"corporations create great wealth but cause great harm." -- do you agree? 
"corp's are designed to benefit the stockholders and not the stakeholders." -- who are these stakeholders?

two methods of stockholder investment to raise capital:
1. invest w/ a promise of profit (equity instruments) if the company does well. risk based with a requirement of a profitable venture.
2. selling notes or bonds (debt instruments) with a promise to be repaid a specific amount at a specific time. creditor with a promise to be repaid.

stakeholders are consumers, employees, creditors, the community in which companies do business.

corporation structure.
1. shareholders
2. officers
3. board of directors (monitor)

another view: all groups key to the corp's success are the corp structure.
expand the corp structure listed above to include consumers, creditors,
suppliers, employees, the business community

do corporations have a social responsiblity? (blog article)

open secrets, gladwell article.

AP smith v. barlow: corporation wanted to donate money to princeton
and shareholder objected. the court determined corporations are not
by their nature eleemosynary institutions but instead institutions which 
exist solely for the benefit of its shareholders.

subprime loans/mortgages.

securitization

Dodge v. Ford Motor Co. about the competitive relationship between the dodge brothers and henry ford. the dodges were both shareholders and parts manufacturer suppliers to ford. when ford decided to assembly line and create its own parts, dodges lost a major customer. fiduciary duties are owed from ford to the dodges in the positions and relationship between the company and its shareholders.

ford got to build a new plant but also had to establish new dividends.... there's a lot of probabilities involved. ford felt like he had already made the dodges incredibly rich, and he didn't want to have to continue issuing large, special dividends. though there is some discussion of non-competition, the court doesn't discuss any probability of ford withholding to make the dodges unable to compete.

commercial arbitration class 1

exam: "give a fair shake, you wont' have a problem."
tele ext. 6008
room 4-10


right to a jury trial, though this could be waived in a contract.

late 19th cent/ early 20th cent arbitration:
something about the right to go to court unless you really, really, really don't want to.
when court was faced with an arbitration agreement, it became an issue of whether or not the court handled it or gave it to an arbitrator.

"ouster of jurisdiction": the courts were very protective of their dockets -- simply put, a lot of judges didn't want to be put out of business. and also, most judges had a feeling that arbitrators couldn't handle cases as well as they did. many courts would hold that you couldn't even settle cases by arbitration. so the arbitration clauses proved fairly useless.

1920s -- the NY arbitration statute restructured this.
see NYCPL s. 7501

after this came the federal arbitration statute, largely modeled on the NYS one. over the years, all states incorporated similar statutes to deal with enforcement of arbitration clauses in contractual disputes.

now, the arbitration clause can be interjected and administered as the parties see fit in the confines of the contract.

arbitral tribunal: place where you go to conduct arbitration. simplified procedural rules, but still the assumption is that once you select a tribunal, you will be incorporating their rules.

commercial rules of the american arbitration association.

financial industry regulatory authority (finra).


enforcement -- what does that mean?
basically, that if someone is not cooperating, then you should be able to go to court with an injury that can be addressed in court and be remedied.

each of the statutes allows for creating an award that settles a dispute.

there's nothing in the statutes that discuss whether or not an appellate can review de novo/reverse a decision *only if the tribunal arbitrator is wrong* (this is a concern in the consumer and the brokerage areas), but the standard is that for errors or law or fact -- generally is not a review.

are arbitrators supposed to apply the law? SCOTUS says "arbitrators are supposed to stay faithful to the statutes" but what does this mean???

the US has been super gung-ho arbitration over the past 20 years. but when these statutes were written, there weren't anti-discrimination acts, securities acts, anti-trust acts... these are based on common law issues! the federal courts deal with other types of statutory claims because of federal question/diversity. SCOTUS has knocked down a lot of case law that said stat claims were not

there's frequently motions in congress to cut back on arbitration of commercial/consumer disputes. and obama banned federal contracts that have employee arbitration clauses.

arbitration -- a sense that there's more flexibility to do equitable remedies. but it's hard to say how far that goes....

integral elements:
1. at least one neutral arbitrator
2. fundamental right to put in a case. rules of evidence don't apply. must let material into the record.
3. procedures that are fundamentally fair. such as procedures for selection of arbitrators, neutrals, etc.
4.

proRo class 1

prof. degirolami

office hours 2-4:30
www.ncbex.org/multistate-tests

next proRes date is 11/6/10. take additional bar prep mpre class.
don't procrastinate on the mpre.

reading assignments are on twen

exam:
- 2.5/3 hrs
- limited open book

- multiple choice (about 15)
- a very substantial essay
* conflicts will be tested on the exam and must be mastered
* the model rules must be mastered/internalized


n.b. -- for monday class, don't need to read 39-53. that will come up later in rule 10.13

read spalding v. zimmerman for monday.

model rules for pro conduct.
purpose of the rules is to know
1. basis for discipline for lawyers
2. what conduct is correct for lawyers to follow

can correct behavior be determined and managed by a rule???

read rule 2.3
read rule 2.1

the ABA.
inherent powers doctrine: courts have authority over lawyers, stemming from common law.
bar admission: typically you only need to take the bar admission for the state in which you want to practice. not always the case tho -- sometimes the jurisdiction requires state and fed.

to practice:
     - gotta pass the bar
     - gotta pass character and fitness
     - gotta have "sponsors"

n.b. -- mirror your bar apps on your law school apps, because they will compare the two (wtf??)

hypo. let's say you have a mega corp. v. a widow. let's say one or both parties wants to stall in discovery. should there be a differnce if a party is inexperienced, economically disadvantaged, etc... see comment 3 of rule 2.1. does the mega corp need less protection than the widow? should it be assumed that the corp should know what's moral/ethical, whereas the widow couldn't be assumed to know what's moral/ethical?

two types of clients - repeat clients and one-time players

hypo. you know your client is guilty. you also know an eyewitness has an impairment that questions whether or not her methods of correctly assessing his culpability was faulted. what does honesty require in this situation?

hypo. you represent a products manufacturer and the other attorney is a young and inexperienced attorney making a lot of mistakes. is it fair to take advantage of those mistakes?

manufacturer client is getting clobbered by market and wants to outsource. it will mean that many people lose their jobs. client consults you on the WARN act, considering the mass layoffs, and the ways it can avoid the regulations of the act. do you tell the client that it's behaving badly?

why rules? these hypos above are difficult questions to answer. because people disagree in good faith about what morality requires, and so there needs to be some kind of standard for legal practice.

client has legal entitlement + means = lawyer has no right to morally advise

for next time: readings on prof engagement on twen.